How to monetize vehicle data thanks to in-car technologies - what’s inside a Software-Defined Vehicle - Part 2

    Brook. Not a stream yet, though. But in the foreseeable future, it is going to be a proper river. What are we talking about? Data obtained from vehicles. Experts estimate that data inflow is likely to rise from approximately 33 zettabytes (this is how much we obtained in 2018) to 175 zettabytes in 2052. For OEMs and companies from the broadly-defined automotive industry, this means one thing. Endless monetization possibilities. Providing that they face the challenges connected with data capture, filtering and storage, and become familiar with the in-vehicle technologies enabling that.  

The potential is enormous. However, the Capgemini report shows that there is still a long way ahead before reaching its full potential. Today, as many as 44% of OEM customers do not yet avail of any online service in their cars, and still,  connecting to the network is just the starting point because without the Internet there is no option of monetizing data. And even if the vehicle is already connected to the network, only every second driver declares frequent use of this type of service.

Anyway, the condition of the Internet is a challenge in itself. Today, in modern vehicles, there are around 100 points from which information can be downloaded (in the future it is estimated that there will be up to 10,000 of them!)

Before we get to know the technologies that enable it (about which we will write in the second part of the article), let's have a look at the challenges and checkpoints that must be considered when creating a data monetization strategy for a software-defined vehicle.

5 things to bear in mind if you want to monetize vehicle data

1. Developing the customer value proposition

This is where it all begins- from creating a sales offer and an environment in which drivers will believe you have something unique and valuable for them. Without trade, no technology will guarantee your success. Customers will simply not want to share data.

Think about the unique offer you want to present to them and develop a clear data management policy. As a result, it should be followed by the selection of appropriate technologies, and then their implementation in vehicles.

Obtaining data to offer the driver safety or a good sense of direction differs from getting information related to entertainment or directing the customer to a sale in a nearby shopping mall.

It would be perfect if the developed customer value proposition was consistent with your brand's DNA and features that have always been associated with it. This would make it easier to convince users, remain in line with your business assumptions, and stand out from the competition. Focus on technology application, not on technology just to be used.

2. Consider matching technology with the data for which users are most likely to "pay"

Speaking of users’ preferences, even today, at the stage when the technologies of obtaining data from vehicles are not fully-fledged yet, it can be seen that for some services customers are willing to give up some of their privacy, while they are largely opposed or reluctant towards others.

Capgemini's research shows that the group with the greatest potential includes services related to safety and facilitating driving:

•  hazard warning;
•  collision warning;
•  theft detection system;
•  e-call;
•  interactive language assistance.  
  

On the other hand, the greatest objection among users is aroused by services related to broadly -defined shopping:

•  In-car delivery;
•  in car e-commerce.

Keep this in mind when choosing technology to help you monetize your data.

3. Data collector strategy

The data in the vehicle is acquired by means of special sensors and then sent to collectors, which are supposed to gather this data and enable it to be transferred to the cloud. To effectively filter this data and derive maximum benefit from it, you need reliable technology to facilitate it. Due to the huge amount of data and the interaction between various sensors, the universal data collector is the best solution, as it collects all information obtained from sensors in the car.

In order to fully use its potential, during the implementation phase of this technology, it is crucial to ensure close work of the engineering team with people responsible for digital data management (see the next section). Close cooperation of both teams will help to obtain more interesting data and implement new services more efficiently.

4. Provider of IoT data platform

Collecting data from vehicles is impossible without an  IoT platform connected to cloud solutions dedicated to the  automotive industry - this is where data is sent and analyzed to be later collected by the vehicle sensors.

Regardless of which platform you choose (the most popular solutions on the market today are: Microsoft Azure, Amazon AWS, and Otonomo, operating in the SaaS system), 5 features that such a platform should have are of paramount importance to enable the efficient flow of information.

 You can read more about it in     our article on this issue    .

5. Data enrichment

While this article focuses on technologies directly related to obtaining data from the vehicle, it should not be overlooked that the software-defined vehicle operates in a wider ecosystem. Monetization of data from vehicles will not be possible without technologies related to infrastructure (e.g. smart-road infrastructure,  V2X communication , or high-speed data towers), as well as coordination of back-end processes for which entities such as policymaker, cybersecurity specialist, technical regulator, road infrastructure operator or billing/tolling player are accountable.

To create more valuable and attractive services, a coherent policy is necessary, as it will enrich the data stream from third parties and the user themselves, and will improve cooperation between elements of the ecosystem.

Checkpoints inside the car

In-car technologies are not the only gateway for data that companies can obtain from drivers (another entry point may be, for instance, the driver's smartphone or road infrastructure). However, they are the ones over which OEMs and manufacturers have the greatest control, technically at least.

Before we directly describe the technologies in the vehicle allowing that data to be obtained, let's focus on the  checkpoints that are crucial for the capture of information, its quality, and value for building services.

In the software-defined vehicle ecosystem, we can identify three such areas, a kind of bottleneck on which the flow of data depends. These are:

1.     Vehicle interior and infrastructure.  
2.     Connection to cloud.  
3.     Data cloud.  

Let's have a look at the first area, which is practically entirely the responsibility of the automotive company and is directly related to the equipment in the vehicle.

We can list the following groups of such checkpoints which require closer attention when building a data monetization strategy.

1. Gateway to the customer

Key points due to the start of data gathering and the user's experience - their willingness to share data, and thus increasing the value of the gathered data for the manufacturer.

•     HMI    (i.e. a set of technologies enabling the driver to activate the vehicle and begin collecting data, e.g. touch screens, visual sensors, voice commands, etc. - certainly a topic for a separate article)
•     Data gateway    (port, mobile data connection, USB port, radio connection)
•     Customer ID  

2. Points that build loyalty and the need to buy

That is, the contact points with the offer that allow you to easily download new applications, pay bills and influence the user's willingness to renew the service. The more transparent, engaging, and easy-to-use, the more likely the user is to continue their subscription.

•     App store / ecosystem  
•     Billing platform  
•     In-vehicle infotainment (IVI)  
•     Apps/ content  
   

3. Key points for data security, data analysis and usability

•     CPU/ control unit  
•     Car sensors / actuators  

Software-defined vehicles do not run in a vacuum

When creating a data monetization strategy for a software-defined vehicle, one should always bear in mind the wide ecosystem in which such a vehicle operates. It is not enough to equip it with the technology itself and wait for the flow of  data that will turn into specific value for the enterprise . In such a complex and extensive ecosystem, nothing happens by itself. There is no room for improvisation, omitting checkpoints, and presenting half-baked offers. Yes, the technology that downloads data from the vehicle is crucial, but it won't work unless we bear in mind the broader data management context that reaches beyond collecting and analyzing it.

 With the development of artificial intelligence, the Internet of Things, and cloud solutions, the amount of data we can retrieve from a vehicle is expanding every year. Manufacturers improve efficiency in converting this data into new services and enhance their own offerings based on the information received from connected car systems. Can software-defined vehicle solutions be successfully applied to enabling fleet management systems for hundreds or even thousands of models? Of course, it can, and even should! This is what today's market, which is becoming steadily more car-sharing and micro mobility-based, expects and needs.

Netflix, Spotify, Glovo, and Revolut have taught us that entertainment, ordering food, or banking is now literally at our fingertips, available here and now, whenever we need or want it. Contactless, mobile-first processes, that reduce queues and provide flexibility, are now entering every area of the economy, including  transportation and the automotive industry .

Three things: saving time, sparing money, and ecological trends dramatically change the attitude toward owning a car or choosing means of transport. Companies such as Uber, Lyft, or Bird cater to the needs of the younger generation, preferring renting over ownership.

The data-driven approach has become a cornerstone for automotive companies - both new, emerging startups and older, decades-old business models, such as car rental companies. None of the companies operating in this market can exist without a secure and well-thought-out IT platform for fleet management. At least if they want to stay relevant and compete.

It is the software - on an equal footing, or even first before the unique offer - that determines the success of such a company and allows it to  manage a fleet of vehicles , which sometimes includes hundreds, if not thousands of models.

Depending on the purpose of the vehicles, the business model, and the scale of operations, solutions based on software will obviously vary, but they will be beneficial to both the fleet manager and the vehicle renter. They allow you to have an overall view of the situation,  extract more useful information from received data and reasonably scale costs.

Among the potential entities that should be interested in improvements in this matter, the following types of fleets can be specifically mentioned:

•  city e-scooters, bicycles, and scooters;
•  car rentals;
•  city bus fleets;
•  tour operators;
•  transport and logistics companies;
•  cabs;
•  public utility vehicles (e.g., fire departments, ambulances, or police cars) and government limousines;
•  automobile mechanics;
•  small private fleets (e.g., construction or haulage companies)
•  insurers' fleets;
•  automobile manufacturers' fleets (e.g., replacement or test vehicles).

The benefits of managing your fleet with cloud software and the Internet of Things (IoT)

Real-time vehicle monitoring (GPS)

A sizeable fleet implies a lot of responsibility and potentially a ton of problems. That's why it's so important  to promptly locate each vehicle included and monitor it in real-time:

•  the distance along the route,
•  the place where the car was parked,
•  place of breakdown.

This is especially useful in the context of a bus fleet, but also in the  sharing-economy group of vehicles : city e-scooters, bicycles, and scooters. In doing so, the business owner can react quickly to problems.

Recovering lost or stolen vehicles

The real-time updated location, working due to  IoT and wireless connectivity , also enables operations in emergency cases. This is because it allows you to  recover a stolen or abandoned vehicle.

These benefits will be appreciated, for example, by people in charge of logistics transport fleets. After all, vehicles can be stolen in overnight parking lots. In turn, the fight against abandoned electric 2-wheelers will certainly be of interest to owners of the startups, which often receive complaints about scooters abandoned outside the zone, in unusual places, such as in fields or ditches in areas where there is no longer a sidewalk.

Predictive maintenance

We should also mention  advanced predictive analytics for parts and components such as brakes, tires, and engines. The strength of such solutions is that you receive a warning (vehicle health alerts) even before a failure occurs.

The result? Reduced downtime, better resource planning, and streamlined decision-making. According to estimates, these are savings of $2,000 per vehicle per year.

More convenient vehicle upgrades - comprehensive OTA (Over-the-Air)

Over-the-Air (OTA) car updates are vital for safety and usability. Interconnected and networked vehicles  can be updated in one go , simultaneously. This saves the time otherwise required to manually configure each system one by one. In addition, operations can also be performed on vehicles that happen to be out of the country.

Such a facility applies to virtually all industries relying on extensive fleets, especially in the logistics, transportation, and tourism sectors.

Intermediation in renting

A growing number of services are focusing on  service that is fast, simplified, and preferably remote. For instance, many rooms or apartment rentals on Airbnb rely on self-service check-in and check-out, using special lockups and codes.

Similar features are offered by  software-defined vehicles , which can now be rented "off the street", without the need for service staff. The customer simply selects a vehicle and, via a smartphone app, unlocks access to it. Quick, easy, and instant.

Loyalty scheme for large fleets

Vehicle and software providers are well aware that new technology comes with great benefits, but also with a degree of investment. In order to make such commitments easier to decide upon, attractive loyalty schemes are being rolled out for larger fleets.

So as a business owner you reap double benefits. And at the same time you test, on lucrative terms, which solutions work best for you.

Improved fleet utilization

Cloud and IoT software enables more practical use of the entire fleet of available vehicles and accurately pinpoints bottlenecks or areas where the most downtime occurs.

This is an invaluable asset in the context of productivity-driven businesses, where even a few hours of delay can result in significant losses.

By contrast,     artificial intelligence(AI)-based predictions   (for example, information about an impending failure)  offered to commercial fleets provide fleet managers with more anticipatory data , which can significantly cut business costs. Other benefits include improved emissions control or higher environmental standards.

Increasing safety

Minimized almost to zero danger of hacking into the system contributes to the security of the fleet-based business.

    Case study: Ford Pro™ Telematics  

Revenues based on software and digital services is not a bad deal for all informed participants in the business environment. Some big players like Ford have based their entire business model, on this idea.  With their Ford Pro™ series of solutions, they want to become an accelerator for highly efficient and sustainable business. Their offering is based on market-ready commercial vehicles to suit almost any business needs and on all-electric trucks and vans. They are developing telematics in particular.

 Ford Chief Executive Jim Farley puts it bluntly: We are the Tesla of this industry.

Bold assumptions? Yes, but also an equally bold implementation. Created in May 2021, a standalone Ford Pro™ unit is to focus exclusively on commercial and government customers. The new model also serves as a prelude to expanding digital service offers for retail customers.

The objective is to increase Ford Pro's annual revenue to $45 billion by 2025, up 67% from 2019.

Streamlined vehicle repairs

Managing a large group of vehicles also necessitates regular inspections and repairs, and at different times for different vehicles. This entails the need to control each unit individually.

The risk this poses is that information about the problem may not reach decision-makers in time, and besides, instead of the service and product, the executive is constantly focused on responding to anomalies. New technologies partially eliminate this problem.

As part of the Ford Pro Telematics Essentials package, vehicle owners receive real-time alerts on vehicle status in the form of engine diagnostic codes, vehicle recalls, and more. There's also a  scheduled service tracking feature and, in the near future, remote locking/unlocking, which will further enhance fleet management.

Driver behavior insights

Human-centered technology can help improve driver performance and road safety. Various sensors and detectors inside Ford vehicles provide a lot of interesting  information about the driver's behavior. They monitor the frequency and suddenness of actions such as braking or accelerating. Knowledge of this type of behavior allows for better fleet planning and improved driver safety.

Fuel efficiency analysis

Fuel is one of the major business costs for companies managing a large number of vehicles. Ford Pro™ Telematics, therefore, approaches customers with a solution to  monitor fuel consumption and engine idle time.

This functionality is designed to  optimize performance and reduce expenses. Better exhaust control also indirectly lowers operating costs.

Manage all-electric vehicle charging with E-Telematics

Telematics also provides an efficient way to manage a fleet consisting of electric vehicles. There are many indications that due to increasingly stringent environmental standards, they will form the backbone of various operations.

That's why Ford has developed its own E-Telematics software. It enables  comprehensive monitoring of the charging status of the electric vehicle fleet. In addition, it helps drivers find and pay for public charging points and facilitates reimbursement for charging at home.

The system also offers the ability to accurately compare the efficiency and economic benefits of electric vehicles versus gas-powered ones.

Better cooperation with insurers

Cloud-based advanced telematics software not only provides a better customer experience. What also counts is a streamlined collaboration with insurance providers and the delivery of vehicle rental services to clients of such companies.

This, of course, requires a special tool that enables:

•  remote processing of the case reported by the customer,
•  making the information available to the rental company,
•  allowing rental company personnel to provide a vehicle that meets the driver's needs.

The goal is to provide  replacement cars for the customers of partnering insurers .

Touchless and counter-less experience

It includes  verifying a customer and unlocking a car using a mobile app . This translates into greater customer satisfaction and the introduction of new business models. With the introduction of mobile apps in app stores,  queues can be shortened. This results in a simplified rental process. From now on, it is more intuitive and focused on user experience and benefits. Because nowadays customers expect mobile and contactless service.

    Case study: car rental  

The leading rental enterprise teamed up with Grape Up to  provide counter-less rental services and a touchless experience for their customers . By leveraging a powerful touchless platform and telematics system used by the rental enterprise, the company was able to build a more customer-friendly solution and tackle more business challenges, such as efficient stolen car recovery and car insurance replacement.

Software-defined vehicle solutions in vehicle fleets. How do implement them sensibly?

Technological changes that we are experiencing in the entertainment industry or e-commerce have also made their way into the automotive sector as well as micro-mobility and car rentals. There are many indications that there is no turning back.

Solutions such as real-time tracking, predictive maintenance, and driverless rental are the future. They help manufacturers execute their key processes more efficiently and track and manage their fleets effectively. In turn, the end customer receives an intuitive and convenient tool that fosters brand loyalty and makes life easier.

Of course, they need to be implemented properly. A large role is played by the quality of software. The key is the efficient flow of data and their cooperation with devices inside the vehicle. That is why it is worth choosing for business cooperation such a company that not only has the appropriate technological competence, but also the knowledge and experience gained during other such projects and implementations for the automotive industry.

 When talking about data monetization in the automotive industry, we tend to focus on technology, safety, sensors, or cloud solutions. However, all these elements fade when confronted with the ultimate element - the driver of the vehicle. Without taking into account their needs and expectations, there can be no question of generating revenue. Any vehicle data monetization strategy must be mindful of this.

We can fine-tune the system, we can find exceptional partners to implement the software in the vehicle, but without a deep understanding of the vehicle user, no one will benefit from the solutions developed. Our organization will put a considerable amount of effort into building the team and implementing the technology, but the new vehicle features will not be used by the driver.

For this to happen, we need two factors: a value proposition of the brand- which explains clearly and transparently what the user will get out of it, and a coherent action strategy based on a market-back methodology that stems from specific market needs and allow us to develop services that are desired by the customer.

What benefits do customers most often look for in a software-defined vehicle?

Remember that just because people want to use a service, it doesn't mean that they will pay for it. What matters here is not just the benefit, but also the way it is presented, the user experience, and the pricing model. Only the combination of all these elements determines the success of the service. First of all, it is worth focusing on the benefits themselves and only then selecting the right technology to match them.

What are users willing to actually pay for and what are they willing to share only? Many studies indicate that the main factor motivating consumers to share data is gamification and rivalry - this aspect has not changed for years, as we can see for example in social media or e.g. "free" applications, which from time to time appear on the market, gather millions of interested users and vanish in no time. However, when it comes to paying for such "services", users are not so willing to use them.

In vehicles, it looks slightly different. Capgemini's research shows that the connected car services that are most popular with consumers are those related to the "core" functionality of vehicles, such as:

•     safety,  
•     driving comfort,  
•     time saving  
•     reduction of vehicle operating costs.  

Among them, however, the services that are most willingly paid for are:

•     hazard warning,  
•     collision warning,  
•     theft detection systems / vehicle finder.  

Of course, just because entertainment or gamification isn't on the list doesn't mean that automotive companies should avoid them. It's also a way to distinguish and find their own individual voice that corresponds to the broad brand strategy and allows them to stand out in the market. It's about the way they are served, presented to the consumer, and showing that they can actually derive real benefit from them.

It also works the opposite way. Simply creating a "hazard warning" service in a connected car does not immediately guarantee success. It still needs to be packaged properly, run smoothly, and be provided with a payment model that suits the consumer.

Examples of customized connected car services

In-vehicle ads based on navigation and user experience

Is it possible that a driver will like the ads that will be displayed in the car? If we adopt the message to their needs and preferences, in all likelihood, it is. For example, if we often go to McDonald’s, the navigation system can mark such places on our route. We have our favorite clothing brand, right? We will certainly react differently to a sale offer in a shopping mall we just happen to be driving past. The context of shopping and the consumer’s needs are decisive, and the software-defined vehicle is perfectly suited to ensuring that the advertising message is 100% tailored to the driver.

Contextual payments

Removing barriers to shopping and being able to buy everything everywhere is a popular trend in modern commerce. In a vehicle where the driver is focused on the road and has their hands full, such a service makes even more sense. With the development of voice assistants, drivers will be able to pay this way not only for fuel or tolls but also for purchases beyond typical vehicle-related payments. Voice shopping on the way back home from work, instead of looking for a parking space in front of the mall and returning in traffic jams in the evening? Why not?

Sharing information about driver behaviour

Sharing data about the way we drive may not appeal to everyone. But if in return for sharing this information, a company gives us a huge discount on our car insurance or a super attractive leasing offer, then things may take a totally different turn. In cooperation with an insurance company or a bank, such services become a specific bargaining chip the OEM can play with when dealing with the driver.

Manufacturer's connected car applications

Saving money on car maintenance and taking care of the overall condition of the car is a benefit that most drivers will appreciate. A practical and thoughtful manufacturer app that warns of potential breakdowns, component replacements, or servicing will allow the user to enjoy a well-functioning vehicle for longer and sell it at a higher profit. In this way, the OEM gets the driver used to have the vehicle repaired at an authorized service center, and the user, due to the loyalty shown to the brand, can expect future discounts and lucrative offers.

Practical use of telemetry

Sharing telemetry data may seem profitable only to OEMs - after all, as they draw better conclusions based on the collected information and save on R&D processes. However, it is important for companies to make vehicle users aware of the benefits of such services, as well. After all, driving style data can be used to suggest solutions that improve road safety, work on fuel efficiency or reduce overall vehicle operating costs. In each of these cases, the winner is the driver. Example? When a vehicle frequently skids and triggers the ESP/TC system, the system can suggest that the driver should get better tyres (by a specific brand, of course).

Unlocking extra features on the subscription model

Paying for heated seats, just to use them for three months a year, may not be worthwhile for everyone. Well-known to us from streaming portals, the subscription model definitely meets the users’ needs. The customers themselves choose which functionalities they want to pay for and over what period of time. The OEM only has to take care of the right vehicle software that will enable that. And, of course, be careful not to alienate those customers who see this as "yet another" way to squeeze additional payments out of them. That’s how manufacturers can provide both functionalities directly related to the vehicle itself - e.g. better lights or engine boost - as well as those associated with in-car entertainment providers such as Spotify or Apple CarPlay.

What can be done to make the user more eager to pay for data monetization services?

A well-thought-out user experience is essential

In today's digital world, UX and mobile-friendly approaches decide whether a service is viable. If the product is presented in an unclear and incomprehensible way, and it is difficult for the user to find the desired options - they will not use it. The size and color of buttons, the messages displayed, the stability of the application - all of the above is of paramount importance and determine the popularity of the product. Keeping in mind the latest trends, mapping the market, and adapting to consumer trends is necessary to offer the vehicle user service of the quality known to them from e-commerce or their own AppStore.

UX itself is not only a practical tool that helps better track consumer behavior and how they use the service, but also a constant theme to promote and boost brand interest. Does Apple really need to upgrade iOS every year and does Instagram have to offer users a new feed layout every quarter? The answer is obvious. It's simply profitable for the brand.

Start with anonymized data

When creating a strategy for in-vehicle data monetization efforts, it's a good idea to start by developing services that don't require the sharing of personal data. A lower "pain threshold" will make it quicker for the user to learn the benefits of the system and how convenient or useful the service can be. Thus, it will be easier to convince people to use products that require more openness to data sharing. And this may be the next step in the implementation of technological solutions.

Focus on heavy-vehicle users

People who spend most of their day in the car or drive long and demanding routes happily embrace any technical innovations designed to make driving easier and safer for them. It is this group that should be targeted at the beginning of developing your own data monetization model.

Minimizing risks and accurately selecting the group will not solve all challenges, but it will increase the chance of success and help gain a new, loyal group of consumers who will help transfer the technology to other users.

Last, but not least: a flexible payment model

Convenience should accompany the user at every stage of the use of a new service. Not only when it is most beneficial to the user, but also when it is easiest for the user to give it up: whilst paying for the next billing period.

It is worth taking care of the flexibility of the payment model (e.g. one-off payment, freemium model, annual or monthly settlement), adjusting it to the user's needs and not hindering payments.

The smoother and more tailored to the user's needs the whole process of interacting with the service is - from understanding the need to using it to making payments - the greater the chance that the stream of data flowing from a given vehicle will not dry up after a short period of use (read: being frustrated using an underdeveloped product for the first time).

Let's remember that data monetization can succeed provided that it really understands the user, is fair and transparent to them and focuses on user experience. If we didn't have time to get to know the customer's needs, why should they waste their time on services they don't understand and don't need?